El sistema educativo en el Perú previo a la JEC

In the type o f models so far described the inter-firm wage dispersion arises from the different cost-minimising strategies concerning the capital-labour ratio or the labour-quality tradeoff adopted by firms. Perfect competition both in the product and in the labour market guarantees that any non-competitive wage premium w ill be traded away in the long run. However, alternative explanations investigate the possibility o f departures from the competitive paradigm, and postulate the existence o f a relationship between wage dispersion and firms' ability to produce rents. The existence o f some market power or entry deterrence strategies, which characterise some o f the incumbent firms, may represent a source o f rents to be shared - quite independently from explicit co llective bargaining - with workers. In other words, a firm's ability-to-pay may affect wage determination. This idea goes back to the early work o f Slichter (1950), who suggested that managerial practices, in non-competitive markets, might account for the existence o f different pay policies among firms. Managers can use their ability-to-pay to pursue different objectives, such as: low er turnover costs, higher effort and improved work norms10. A similar kind o f relationship can be found in some versions o f the efficiency wage hypothesis in w hich workers perception o f a fair wage is linked to the firm's ability-to-pay (A k erlo f, 1984; Solow, 1979b). Inter-firm wage differentials might reflect differences in firms’ m onitoring conditions. Where individual effort is imperfectly observed and the cost o f shirking are high, firms w ill be prepared to pay higher wages to induce workers to work hard (Shapiro and Stiglitz, 1984).

Bulow and Summers (1986) and Dickens and Lang (1987), identify the existence o f a regime o f imperfect competition - in the product market - and labour market segmentation as 10 Ross and Wa cher (1973), develop a model in which the payment o f above market-clearing wages generate a pool o f applicants who, i f necessary, can be employed to meet an increase in the product demand without rising its price.

the major source o f different pay polices adopted by firm s11. In particular, firm s operating in the primary sector o f the econ o m y can benefit from the payment o f high wages, as this reduces shirking by em ployees and increases both productivity and profits. Conversely, firms in the secondary sector ha ve no rents to share and no scope fo r paying higher than competitive wages, so no e ffic ie n c y gain can be made.

The existence o f the ability-to-pay is also a necessary condition fo r any organised group o f workers, to establish a wage differential with respect to non-organised workers12. In fact, in a perfectly com petitive market (in which firms employ the same technology, have identical effort functions and produce homogeneous products), any firm which following a bargaining process raises its w age above the general level, in the long run, w ill be driven out o f the market by the increase in costs13. Hence, collective bargaining or the simple threat o f collective action can have a stronger and lasting effect on wage determination when rents exists as a result o f market power.

In those firms w h ere unions are strong and the costs o f collective action are particularly high, it may be profitable for the firm to share rents with workers paying a wage premium to prevent strikes and maintain industrial peace (Dickens, 1986)14. Union members' wages w ill be higher the m ore their firms stand to lose from a breakdown in wage negotiations.

2.2.1 The R o le o f Financial Factors

W h ilst the models considered up to this point have a long standing tradition in the economic literature on wage determination, they fail to take into account an important potential factor which may influence firms' behaviour in setting pay levels, namely the financial structure o f the firm (Ross, 1977).

The tim e lag which exists between production decisions and their monetary returns, introduces an element o f risk which can be thought as i f the firm, in any period, face^some probability o f "bankruptcy". A s long as managers take into account the possibility that the firm might not be solvent in the next period • that is might not be able to pay back its outstanding debt, interest charges, etc. -, then its financial structure is likely to influence firms behaviour in wage and employment decisions. In more practical terms, if, for example, the debt-equity ratio is high, managers w ill have less discretion in setting pay levels as they w ill be disciplined through the conditions set out by the lenders.

O nly in recent years have a number o f works considered the impact o f financial factors on labour market decisions. Wadhwani (1986), Nickell and Wadhwani (1987, 1988) and Nickell, Wadhwani and W a ll (1989) formulate models in which the financial structure o f the firm and its probability o f "bankruptcy" enter the production decisions affecting pay and employment levels. Malinvaud (1987) shows how, in the 80's in Europe, the widespread deterioration o f firms' financial performance in terms o f outstanding debt, cash flow s and profitability, had a strong impact on the level o f (un)employment. He also showed that the evolution o f firm s' average debt could be used to explain the pattern o f the business cycle.

In a sim ilar way, the existence o f imperfect information and constraints in the capital market have been advanced to explain wage differentials and unemployment queues among firms (S tiglitz and Weiss, 1981; Greenwald and Stiglitz, 1987). In these terms, i f either the fear o f bankruptcy or the limited access to capital markets play a role in managerial decisions, then the financial structure o f the firm should be considered as a further potential explanation o f wage dispersion.

Finally, there is a large evidence from the industrial relations literature showing that the financial structure o f the firm is a central feature in the wage bargaining process (M acK ay

el al., 1971; Carruth and Oswald, 1987, 1989). In particular, i f a firm is experiencing

financial distress, the incidence o f restrictive practices is likely to diminish. M oreover, in the extreme case o f firms close to bankruptcy, wage-cuts can take place through the so called "reverse collective bargaining" (Henle, 1973; Mitchell, 1982; N ickell e ta l., 1989)15.